The new fundraising could more than double BigBasket's valuation to nearly $1 billion, according to one of the investors involved in the discussions.

The new fundraising could more than double BigBasket's valuation to nearly $1 billion, according to one of the investors involved in the discussions.

BENGALURU: Online grocer BigBasket is in early discussions with multiple financial and strategic investors to raise $110-150 million to expand its warehousing and cold chain facilities, according to four people aware of the negotiations.

The new fundraising could more than double BigBasket's valuation to nearly $1 billion, according to one of the investors involved in the discussions. BigBasket was valued at $450 million following its $150 million fundraise in March last year.

As part of that earlier financing, BigBasket recently secured nearly $16 million from existing investors including Dubai-based private equity firm Abraaj Capital, Silicon Valley-based venture capital firm Bessemer, US-based investment firm Sands Capital, and the World Bank's International Finance Corp, according to the company's filings with the Ministry of Corporate Affairs.

It also raised debt financing of about $7 million last week from venture debt firm Trifecta Capital to meet its working capital needs. BigBasket is presently holding talks with Chinese investors including WeChat owner Tencent and conglomerate Fosun, according to two of the people mentioned above.US-based online retailer Amazon is also eyeing a strategic stake in BigBasket to bolster its daily consumables segment but the talks have not advanced as the online grocer is seeking better financial terms, these people said.

“There is a mismatch in terms of valuations, shareholding and terms of the deal being discussed with Amazon,“ one of them said.

Amazon India has approached BigBasket for a deal at least twice since 2015, these people said.

BigBasket, Fosun and Tencent did not immediately reply to emails seeking comment on the financing discussions. “We do not comment on speculative reports or future plans for what we may or may not do,“ said an Amazon India spokesperson.

Competition is heating up in India's online grocery market with the entry of emarketplaces Amazon India, which sources and delivers products from neighbourhood stores, and Flipkart, which is establishing its own brand of packaged groceries.

Amazon has applied to the Indian government for permission to invest $500 million in a wholly owned venture that will allow it to stock locally produced food items to sell online. If this goes through, Amazon will become the first foreign retailer to enter the segment.

The application states that Amazon India, which already counts daily essentials or groceries as one of its top three categories in India, also plans to open physical stores.

India's online grocery retail market grew 44% year-on-year to $135 million in 2016, and is estimated to grow at the same pace over the next five years, show data sourced from Euromonitor. India was the fifth largest online grocery market in the Asia-Pacific region last year.

The hyperlocal delivery model, which involves buying the ordered items from a corner store and delivering to the buyer within a stipulated time, has not worked for several companies. Grofers has started stocking its own inventory and taxi-aggregator Ola shut its grocery delivery operations within a few months of launch.

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